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India indefinitely restricts sugar exports to control rising prices

08:18 - 27/10/2023

India has imposed an indefinite ban on sugar exports to curb rising prices as the poor monsoon could affect sugarcane production in the 2 main producing states.


According to data provided by India's Ministry of Food and Public Distribution on October 20, the average inflation in retail sugar prices over the past 10 years stood at around 10 per cent per annum.

The government has imposed an indefinite ban on sugar exports to curb rising prices as the poor monsoon could affect sugarcane production in two main producing states, Maharashtra and Karnataka. This past August was a very dry month, thus putting a strain on the sugarcane crop in the states of Karnataka and Maharashtra.

However, in Uttar Pradesh, production is expected to be good due to good rainfall in the state. According to data compiled by the India Meteorological Department (IMD), rainfall in August 2023 is 36 per cent below normal. This made August this year the driest month in more than a century. The sugar balance at the beginning of the current marketing season starting on October stood at 5,700 thousand tonnes, lower than last year's with 6,100 thousand tonnes.

Fearing rising prices due to expected production shortages, the Indian government has decided to impose indefinite restrictions on sugar exports. The sugar export restriction scheduled to end on October 31, 2023 has been extended until further orders, according to an announcement issued by the Directorate General of Foreign Trade (DGFT).

Sugar mills are working to lift export restrictions because prices in the international market are significantly higher than in the domestic market. India's food minister said while some sectors of trade or business may be negatively affected, it should be noted that the government's aim is to ensure stable sugar prices in the country. Sugar prices in the international market reached a 12-year high. However, prices in India have largely remained stable.

The average retail price of sugar stood at Rs 32.43 per kg in 2014-2015. It rose to Rs 42.02 in 2016-2017. Over the past six years, prices have been almost stable. Ministry of Food and Public Distribution data shows that sugar prices stand at Rs 42.25 per kg in 2022-2023 and expect prices of essential food items to stabilize during the festive season thanks to a series of price stabilisation measures implemented by the government.

Apart from sugar, the Indian government has also restricted exports of rice and wheat. The export of broken rice is prohibited and an export tax of 20% is imposed on non-basmati white rice on September 9, 2022. Later, the export of non-basmati white rice was also banned on July 20, 2023. The government has used all sorts of tools — be it selling rice and wheat on the open market, limiting inventories and restricting exports — to keep prices stable.